Home buyers haven’t seen rates this low since August. Could this be the catalyst for a healthier housing market in 2024?
Mortgage rates dropped below 7% for the first time since August, hitting 6.95% this week, Freddie Mac reported Thursday. It’s a holiday gift for home buyers who were sidelined in recent months by higher borrowing costs.
The latest rate drop brings the monthly mortgage payment for a $400,000 home to $2,118. That’s $183 less per month compared to earlier this fall when rates surged to 7.79%, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. Economists predict rates to fall even further heading into the new year.
Adding to the optimism, the Federal Reserve decided Wednesday to leave its benchmark interest rate unchanged and said three rate cuts are likely in 2024. The potential for rate cuts in the new year offers hope that pressure on other interest rates, including long-term mortgage rates, will ease. NAR forecasts mortgage rates to average 6.3% in 2024.
As rates come down, “the momentum is moving in the right direction for stronger sales activity in 2024,” Lautz says. “Will it be a traditional spring real estate market, or will it start to heat up in the winter months as rates decline? Let’s also hope the lower mortgage interest rates translate into stronger homebuilder activity, as inventory will be needed as buyers move from the sidelines.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Dec. 14:
30-year fixed-rate mortgages: averaged 6.95%, falling from last week’s 7.03% average. A year ago, 30-year rates averaged 6.31%.
15-year fixed-rate mortgages: averaged 6.38%, increasing from last week’s 6.29% average. Last year at this time, 15-year rates averaged 5.54%.
Melissa Dittmann Tracey
Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, editor of the Styled, Staged & Sold blog, and produces a segment called "Hot or Not?(link is external)" in home design that airs on NAR’s Real Estate Today radio show. Follow Melissa on Instagram and Twitter at @housingmuse.
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